canara robeco consumer trends fund
TRANSCRIPT
CANARA ROBECO CONSUMER TRENDS FUND
OCTOBER 2018
India Consumption Story
• Sector overview
• Risk-Reward Matrix
Canara Robeco Consumer Trends Fund
• Investment Strategy
• Portfolio Snapshot
• Performance at a glance
Product Positioning
Why Canara Robeco Consumer Trends Fund
Fund Facts
CONTENTS
India Consumption
Story
INDIA- A GROWTH TRAJECTORY WORTH LOOKING AT….
Source: Data from Central Statistics Office, and World Development Indicators. World Bank Report
India’s growth rate has consistently accelerated over
the long run
Rea
l GD
P G
row
thR
eal p
er c
apit
a G
DP
Gro
wth
GDP growth has accelerated over the long run
Per capita income growth has accelerated, too
INDIA- A GROWTH TRAJECTORY WORTH LOOKING AT….
Real GDP (US$, 2010 prices) Sources: PWC Report
Building a $10 trillion economy!
Growing at the present rate, India could be a $5 Tn economy in 20 years
*At a growth rate of 9%, India could be a $10 Tn economy, over the next 20 years
*
GD
P
Consumption
Investment
Govt. Consumption
Balance of Trade
Consumer Durable, Consumer Non-Durable, Services,
Discretionary
Raw Material & work in progress, inventory of unsold goods, plants & equipment,
real estate
Federal, state and local
Export - Imports
Private consumption hold ~60% in our GDP
-10%
10%
30%
50%
70%
90%
2014-15 (FE) 2015-16 (RE) 2016-17 (RE) 2017-18 (AE)
Composition of GDP (at 2011-12 prices)
Private Consumption Government Consumption
Gross Fixed Capital Formation Net export
INDIA ECONOMY- CONSUMPTION SHARE ON THE RISE
Source: MOSPI, CLSA, Morgan Stanley Research, Bloomberg, Worldscope, RIMES, MSCI
INDIA'S REFORM PUSH COULD ACT AS CATALYST FOR CONSUMPTION GROWTH
REFORM PUSH FOR INDIA GROWTH STORY
Multi facted focus on doubling farm income
Building Homes, Pradhan Mantri Aawas Yojna
Urbanisation through Smart Cities
Pradhan Matri Gram Sadak Yojna
Goods and Services Tax Regime
Jan Dhan Yojna, Financialisation
FDI in several Sectors, Retail- 100%
Insolvency and Bankruptcy Code, Recapitalisation of PSU Banks
INDIA: TEN VECTORS OF GROWTH
CREATING WINNING LEAPS ACROSS THE 10 VECTORS (ESTIMATED)
HUMAN DEVELOPMENT INSTITUTIONAL DEVELOPMENT ENABLERS
Source: World Bank, government websites, PwC analysis
Rise in Per Capita Income
Changing Aspiration
Improving Access to Finance
Digitization
CONSUMPTION GROWTH DRIVERS….
Potential to foster greater demand and boost economy
Rising ‘next billion income segment’ and shift in spending
from basics to more
Healthy retail credit growth and ease in access to credit to spur
consumption
Broader access to products and services & formation of business linkages
Opportunities ahead…..
INDIA CONSUMPTION MARKET TO GROW SIGNIFICANTLY
Share of Elite and Affluent households to reach 40% by 2025
Amidst rising income & evolving society, consumers’ behavior &
spending pattern to shift
Rising affluence is the biggest driver of increasing consumption
Source: BCG Analysis, BCG CCI proprietary Income Database. Income distribution is calculated in constant 2015 $
INDIA CONSUMPTION MARKET TO GROW SIGNIFICANTLY
Fueled by rising affluence, Emerging
cities will be the fastest growing
Affluence to be significantly widespread by 2025
Emerging cities: populations of less than 1 millionSource: BCG Analysis, BCG CCI proprietary Income Database. Income distribution is calculated in constant 2015 $
2016 2025
India is one of the largest growing electronics market in the world
Consumer durables/light electricals industry is expected to reach Rs 3 trillion (US$ 46.54 billion) by 2020
Indian electronics market is expected to grow at 41% CAGR between 2017-20 to reach US$ 400 billion
India has the world’s third largest television industry and is expected to grow at a CAGR of 9.8% over CY16-20
CON
SUM
ER D
UR
AB
LES
INDIA IS ONE OF THE LARGEST GROWING ELECTRONICS MARKET IN THE WORLD
Source: www.ibef.org
India became the largest two-wheeler market in the world after selling 17.7 million two-wheelers in 2016
Total production volume grew at a CAGR of 4.43% during FY12-17
Automobile exports from India increased 15.81% year-on-year in April-February 2017-18
Two and three-wheelers exports increased 20.30% and 37.02% in April-February 2017-18
AU
TOM
OB
ILE
AUTOMOBILE INDUSTRY IN INDIA IS EXPECTED TO BE THE WORLD'S THIRD LARGEST BY 2026
Source: www.ibef.org
RET
AIL
STO
RY
REMARKABLE POSITION IN GLOBAL RETAIL RANKINGS WITH HIGH MARKET POTENTIAL
Source: www.ibef.org
CONSUMPTION STORY MEDIA VALIDATION
Zee Entertainment Enterprises Ltd
Media & Entertainment
Havells India Ltd
Consumer Durables
HDFC Bank Ltd.
Bank
Bajaj Finance Ltd.
Finance
Maruti Suzuki India
Ltd.
Auto
Britannia Industries Ltd
Consumer Non-Durables
Sector/ Stocks mentioned are only for illustration purpose and are part of benchmark of the fund “S&P BSE 100 TRI”. The companies mentioned do not constitute any recommendation from Canara Robeco AMC Ltd. Portfolio of the scheme is subject to changes within the provision of the SID. Please refer SID for scheme related information
OUR DAILY LIFESTYLE EXPOSURE
RISK-REWARD MATRIX
Thematic Funds have high risk as well as high reward as compared to Other Equity Funds
Balanced Fund
Thematic Funds
Multi Cap /ELSS
Large Cap Fund
Index Funds
Large & Mid Cap Funds
VO
LATI
LITY
RETURNLOW MEDIUM HIGH
Broad gamut to operate with and invest in stock related to particular theme
Higher risk and volatility as compared to other category
Capitalise on changing consumption pattern &
Aim to gain from rising Indian consumer market
Presenting Canara Robeco Consumer Trends Fund
INVESTMENT PHILOSOPHY & OBJECTIVE
We believe it is companies and not stocks that create wealth
Invest in robust growth-oriented businesses with competent management at reasonable valuations
Investment Philosophy
Investment Objective
INVESTMENT PROCESS
Investment process designed
to achieve the investment
objective in a disciplined
manner
Competent Management
Reasonable Valuations
Robust Business Fundamentals
Investment Universe
Macro Research
• Macro Research & Intelligence
• Identification of themes
• Tracking business cycles
Stock - Specific Ideas
• In-house fundamental research
• Management meetings
• Sell-side research and sector specialists
• Behavioral screener
IDEATE SCREEN DESIGN
Final Portfolio
Internal Risk Management Limits• Tracking Error• Ratio Var• Beta Monitoring
Investment Mandate
• Market Cap of the stock
Regulatory Limits
• Individual Stock Limits
Investible Ideas
Investment Recording
• Captain’s Log
Investment Checklist
3 ST
EPS
INV
ESTM
ENT
PR
OCE
SS
CANARA ROBECO CONSUMER TRENDS FUNDThematic - Consumption & Finance - An open ended equity scheme following the consumption and financial theme
Benefit from the “India Growth Story”
Designed to benefit from demographic advantage of “YOUNGINDIA” for the next decade and the rapid urbanization and evolutionof the cities
Theme to Team with
The fund identifies themes like changing consumption patternemerging out of rising middle class and increase in per capita incomepotential
Macro-economic fundamentals are slowly stabilizing; Banks & FinancialSector is a beta-play & any improvement in economic fundamentals islikely to benefit this sector
The Government is believed to be committed towards boosting growth aswell as taming inflation. This is on the back of expansion in the middleclass consumers and the evolution of the Indian economy from largelyinformal to formal
Large Cap Mid Cap Small Cap
Growth Value Blend
Diversified Thematic Sector
Investment Style
Quantitative Information Values
Standard Deviation 18.11
Portfolio Beta 1.12
Portfolio Turnover Ratio 1.08 times
R-Squared 0.86
Sharpe Ratio 0.30
Portfolio Quants:
Data as on 31st October’18
INVESTMENT STRATEGY
Consumer Trends Fund, being a thematic fund, invests in the niche space and follows a ‘Growth’style of investing
The Fund invests in stocks across the Market Capitalization range and seeks to generate‘compounding’ returns from investing in high growth and competently managed companies
Focus is on selective categories such as 1) discretionary consumption - supported by aspirationalspending and rising disposable income and 2) the retail financers (banks and NBFCs) benefitingfrom the low credit penetration in the retail segment
The fund participates in categories supported by regulatory or demand-backed tailwinds
For stock selection, we spot the changing dynamics in an industry, identify winners early and thenstay invested with superior executors to earn compounding returns
The AMC focusses on the fundamentals of the business, the quality of management, sensitivity toeconomic factors and the financial strength of the company
SECTOR OUTLOOK
Consumer Durable
•Sector is expected to witness good growth on the back of improving macro and demographic factors•Consumer durables market in India is estimated to be Rs 1.4 trillion (US$ 20.3 billion) in 2017. The industry is expected to reach Rs. 3
trillion (US$ 43.5 billion) by 2022
Auto
•We see huge penetration upside in 4-wheelers. 2-wheelers would continue seeing growth backed by premiumisation and rural demand recovery. Pick-up in overall consumption and infrastructure segment to aid growth in MHCVs
Retail
•Retail market in India is estimated to reach US$ 1.1 trillion by 2020 from US$ 840 billion in 2017, with modern trade expected to grow at 20 – 25% per annum, which is likely to boost revenues of Indian companies
Tourism
•Consumption theme also adds to the tourism and hotel industry in India. India witnessed foreign tourist arrivals growth rate in February 2018 over February 2017 was 10.1%
•Foreign tourist arrivals into the country is forecast to increase at a CAGR of 7.1% during 2005–25
Media & Entertain
m-ent
•The sector grew at a CAGR of 18.6% from 2011-2017; and is expected to grow at a CAGR of 14% to touch US$ 37.55 billion by 2021 from US$ 22.75 billion in 2017
•Going forward, the advancement in digital technologies could significantly impact the consumer behavior across all segments
Banking & Finance
• Credit off-take has been surging ahead over the past decade, aided by strong economic growth, rising discretionary spend, increasing consumerism & easier access to credit.
•With consumption the demand for loans has grown faster for retail segment aiding overall credit growth
PORTFOLIO SNAPSHOT
Source: Internal, Data as of October’18
A concentrated portfolio with 27 stocks Top 3 sectors: 78.49% Top 5 Sectors: 87.78% Top 10 Stocks: 52.90%
Company Industry Classification % of Net Assets
HDFC Bank Ltd Banks 8.40%
ICICI Bank Ltd Banks 6.78%
Hindustan Unilever Ltd Consumer Non Durables 5.57%
Reliance Industries Ltd Petroleum Products 5.48%
Britannia Industries Ltd Consumer Non Durables 5.28%
Asian Paints Ltd Consumer Non Durables 4.94%
ITC Ltd Consumer Non Durables 4.18%
Dabur India Ltd Consumer Non Durables 4.13%
State Bank of India Banks 4.10%
Bata India Ltd Consumer Durables 4.04%
Sector Holdings:Top 10 Holdings:
0% 10% 20% 30% 40% 50%
Chemicals | 3.81%
Petroleum Products | 5.48%
Consumer Durables | 14.87%
Banks | 25.10%
Consumer Non Durables | 38.52%
PERFORMANCE AT A GLANCE
Scheme has generated Rs. 34,530
on an investment of Rs.10,000 Since inception
The past performance may or may not be sustained in the future. Returns are based on growth NAV and are calculated on compounded annualized basis for a period of more than (or equal to) a year and absolute basis for a period less than a year.Inception Date: September 14, 2009. Different plans have a different expense structure. Returns are based on NAV of Regular Plan - Growth Option. The current fund manager Ms. Cheenu Gupta is managing the scheme since 15-June-2018.Mr. RaviGopalakrishnan managed the scheme from 01-Oct-2017 till 15-June-2018#Scheme Benchmark , ##Additional Benchmark . Load is not taken into consideration for computation of returns. Returns of dividend option under the scheme for the investor would be net of distribution tax as applicable. The performance of otherfunds managed by fund manager is on the slide number 31.
Data as on 31st October’18
Performance: Lumpsum Investment – P2P
Performance: SIP Monthly
Fund has outperformed benchmark and broad
market index over long term
PeriodReturns %
Current Value of Standard Investment of ₹ 10,000
SchemeS&P BSE 100 TRI
#S&P BSE Sensex
TRI ##Scheme
S&P BSE 100 TRI #
S&P BSE Sensex TRI ##
Last 1 Year -2.21% 0.24% 4.91% 9,779 10,024 10,491
Last 3 Years 11.24% 10.63% 10.33% 13,773 13,546 13,436
Last 5 Years 17.03% 12.72% 11.75% 21,966 18,204 17,430
Since Inception (CAGR) 14.53% 7.82% 13.03% 34,530 19,894 30,620
Particulars Total Amt invested (INR) Market Value (INR) Canara Robeco
Consumer Trends FundS&P BSE 100 TRI
#S&P BSE Sensex
TRI ##
1 year 1,20,000 1,12,365 -11.59% -5.46% -1.82%3 years 3,60,000 4,08,785 8.43% 9.64% 10.92%5 years 6,00,000 8,12,193 12.06% 10.03% 10.01%7 years 8,40,000 14,05,506 14.44% 11.86% 11.59%
Since Inception 11,00,000 21,35,058 13.95% 11.04% 10.81%
Investment date is taken to be 1st
of the month or subsequent day if 1st
is a holiday and investment of Rs.10,000 is taken. Return are as on 30th
Apr’18 and are CAGR. The calculations are based on the regular growth plan NAVs. Past performance may or may not be sustained in the future. Scheme Benchmark#, Additional Benchmark##. Inception Date: September 16, 2003
PERFORMANCE AT A GLANCE
Canara Robeco Consumer Trends Fund has outperformed the benchmark since inception
Source: ICRA MFI Explorer, Returns are as on 31st October’18 and are CAGR. The calculation are based on the regular growth plan NAVs. # Returns shown are average of daily rolling (CAGR %) for 3 years period. Data under consideration is from since inception. Past performance may or may not be sustained in the future. Scheme Benchmark#, Additional benchmark##. Inception Date : September 14, 2009
-1.38 -1.34
0.04
31.84
24.51 23.82
16.07
11.50 10.88
-5
0
5
10
15
20
25
30
35
Canara Robeco Consumer TrendsFund - Reg - Growth
S&P BSE 100 TRI S&P BSE Sensex TRI
Minimum Maximum Average
3 Years Rolling Returns
2000
7000
12000
17000
22000
27000
32000
37000
42000
47000
Sep-
09
Jan-
10
Apr
-10
Aug
-10
Dec
-10
Mar
-11
Jul-1
1
Oct
-11
Feb-
12
Jun-
12
Sep-
12
Jan-
13
May
-13
Aug
-13
Dec
-13
Apr
-14
Jul-1
4
No
v-14
Mar
-15
Jun-
15
Oct
-15
Feb-
16
May
-16
Sep-
16
Dec
-16
Apr
-17
Aug
-17
No
v-17
Mar
-18
Jul-1
8
Oct
-18
Value of 10000 invested in Canara Robeco Consumer Trends Fund - Reg - Growth
Value of 10000 invested in S&P BSE 100 TRI
PRODUCT POSITIONING
Above positioning is for illustration purpose only
Multi Cap
Large Cap
Large & Mid Cap
Thematic
ELSS
CR Equity Diversified
Fund
CR Blue Chip Equity
Fund
CR Emerging Equities
CRInfrastructure
CR Consumer
Trends Fund
CR Equity Tax Saver
Fund
SATELITE PORTFOLIO
CORE PORTFOLIO
NEED BASED
Consumer Trends Fund, being a thematic fund, invests in the niche space and follows a ‘Growth’ style of investing
Expected turnaround in the economic cycle leading to increase in employment will boost discretionary consumption and benefit the sectors that fund invests in
Fund would invest in stocks across the Market Capitalization range and seek to generate ‘compounding’ returns from investing in high growth and competently managed companies
WHY CANARA ROBECO CONSUMER TRENDS FUND?
FUND FACTS
Data as on 31st May’18
Data as on 31st October’18
FUND FACTS
Ms. Cheenu Gupta
S&P BSE 100 TRI
Rs. 255.44 Crs (Month End AUM)
Performance of Fund Manager
Data as on 31st May’18Data as on 31st October’18
The past performance may or may not be sustained in the future. Returns are based on growth NAV and are calculated on compounded annualized basis for a period of more than (or equal to) a year and absolute
basis for a period less than a year. Inception Date: September 14, 2009. Different plans have a different expense structure. Returns are based on NAV of Regular Plan - Growth Option. The current fund manager Ms.
Cheenu Gupta is managing the scheme since 15-June-2018.
This product is suitable for investors who are seeking*
• Capital appreciation over long term• Investing in equity and equity related securities of companies following the Consumption and Financial Theme
*Investors should consult their financial advisers if in doubt about whether the product is suitable
Canara Robeco Consumer Trends FundThematic - Consumption & Finance Theme -An open ended equity scheme following the consumption and financial theme
RISKOMETER
The information used towards formulating the outlook have been obtained from sources published by third parties. While suchpublications are believed to be reliable, however, neither the AMC, its officers, the trustees, the Fund nor any of their affiliates orrepresentatives assume any responsibility for the accuracy of such information. CRMF, its sponsors, its trustees, CRAMC, its employees,officer, directors, etc. assume no financial liability whatsoever to the user of this document. Mutual Fund Investments are subject tomarket risk. Investors are requested to read the Scheme related documents carefully before investing.
DISCLAIMER
Mutual Fund investments are subject to market risks, read all Scheme related documents carefully